The Bank of Japan on Thursday upgraded its assessment of the economy, declaring that the world’s third-largest economy is back on a recovery track, a move that could nudge Prime Minister Shinzo Abe to proceed with a sales tax hike from next April.

Here are five takeaways from Gov. Haruhiko Kuroda’s news conference following a two-day meeting of the bank’s policy board.

Sales tax

Mr. Kuroda issued the strongest warning yet over putting off the tax hike, saying that the BOJ can do little to cope with potential consequences in financial markets from a loss of confidence in Japan’s fiscal policy. “It is highly uncertain how that would affect the bond and stock markets,” Mr. Kuroda said, referring to any changes to the government plan to raise the 5% sales tax to 8% from April. “There would be extremely limited scope for (the BOJ) to take action.”

Mr. Abe has said he’ll make a final decision in early October whether to go ahead with the tax increase, after examining the BOJ’s quarterly tankan business survey due on Oct.1.

Future easing

While the BOJ stood pat on policy Thursday, there is speculation that it may take additional easing action next spring to mitigate the impact of the sales tax hike on personal consumption. Mr. Kuroda said the bank was ready to take action should it affect its goal of achieving 2% inflation. “(If it) makes it difficult for us to achieve the 2% price stability target, we will take necessary measures in response.” He didn’t specify what measures he had in mind.

Pulse of economy

Mr. Kuroda was upbeat on many aspects of the Japanese economy, saying: “Both in firms and households, a positive mechanism where a rise in income feeds into spending is firmly in place.” He added that exports are picking up, supported by the weak yen trend. “Firms’ capital spending, led by non-manufacturers, are starting to pick up on the back of improved corporate profits.” Looking forward, the governor said the economy will continue to recover moderately and that growth would be “sustainable.”

Fed’s tapering

Financial markets are closely watching when and how the U.S. Federal Reserve will scale back its bond-purchasing program. Mr. Kuroda said the markets were now getting “jittery,” adding that some emerging nations’ currencies had fallen considerably as investors shunned risk-taking. But he also said: “The U.S. economic upturn itself could have positive effects on the global economy including emerging countries through trade transactions.”

Overseas economies and Syria

Mr. Kuroda described the performance of overseas economies as being “a bit weaker” than what the BOJ had anticipated in April, although he doesn’t foresee any major risks emerging.

On tensions over Syria, Mr.Kuroda said it had affected global financial markets through a rise in crude oil prices. “We will closely watch any impact on the global financial market.”

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Japan Real Time is a newsy, concise guide to what works, what doesn’t and why in the one-time poster child for Asian development, as it struggles to keep pace with faster-growing neighbors while competing with Europe for Michelin-rated restaurants. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, the site provides an inside track on business, politics and lifestyle in Japan as it comes to terms with being overtaken by China as the world’s second-biggest economy. You can contact the editors at japanrealtime@wsj.com